Employment expected to grow in 2011

Slovakia’s labour market was hit hard by the global financial and economic crisis as the country’s small and very open economy depends significantly on the economic health of its main business partners. It seems that the country and its labour market have now overcome the worst days of the recent downturn in business activity, and employment prospects for 2011are more positive. Employment in the industrial sector is increasing again and employers believe that future changes in Slovakia’s Labour Code could make the labour market more flexible, leading to the creation of additional jobs.

Observers say the labour market has put the worst of the crisis behindObservers say the labour market has put the worst of the crisis behind (Source: SITA)

Slovakia’s labour market was hit hard by the global financial and economic crisis as the country’s small and very open economy depends significantly on the economic health of its main business partners. It seems that the country and its labour market have now overcome the worst days of the recent downturn in business activity, and employment prospects for 2011are more positive. Employment in the industrial sector is increasing again and employers believe that future changes in Slovakia’s Labour Code could make the labour market more flexible, leading to the creation of additional jobs.

“The labour market has the worst behind it,” Michal Mušák, the senior analyst of Slovenská Sporiteľňa, told The Slovak Spectator, adding that unemployment still remains high and the situation has not been improving very much yet. But Mušák is optimistic, predicting a gradual reduction in unemployment levels as early as this spring, adding it appears that the private sector has been able to hire enough people to compensate for layoffs occurring in the public sector.

“During the last few months the number of employees increased, especially in industry,” Mušák said. “However, the 14,000 jobs which have been created in this sector since February [2010] are far from compensating for the loss of 130,000 jobs during the previous two years.”

To draw a proper picture of the current labour market Mušák noted that the industrial sector employed as many as 600,000 people in March 2009 but in February 2010 it was only 472,000, a decline of 21 percent.

“I expect that industry should help decrease unemployment during the coming year,” Mušák said. “Apart from gradual revival in the economy, new investments in the automotive and electro-technical industries should contribute to expanding employment. On the other hand, layoffs will continue in state administration in 2011.”

According to the most current available statistics from Slovakia’s Statistics Office, employment in the industrial sector rose 2 percent year-on-year to 485,423 people in November 2010. At the end of last year’s third quarter, a total of 2.31 million Slovaks were employed, making up 85.5 percent of the economically-active population.

Employers are optimistic about boosting employment, putting a large portion of their hope on changes to the country’s Labour Code, while continuing to call for better connections between Slovakia’s educational system and the actual needs of the job market.

Martin Hošták, the secretary of the National Union of Employers (RÚZ), sees implementation of measures that will support creation of new work positions as a solution to the country’s high unemployment, specifying that these include changes to the current labour legislation which he views as probably the biggest barrier to creating new jobs.

“A flexible Labour Code is a basic construction element of the competitiveness of our country and thus it should undergo a fundamental change towards a modern and flexible system which creates conditions for creation of new work positions,” Hošták told The Slovak Spectator.

Hošták expects that labour market developments will somewhat mimic what happened in 2010.

“Much will depend on whether some key branches of the Slovak economy will manage to revive, in particular the automotive industry or construction, which is currently in decline,” said Hošták.

Branislav Masár, the executive director of Slovakia’s Federation of Employers’ Unions (AZZZ) agreed with Hošták and added that despite high unemployment employers still perceive a lack of qualified personnel.

“There are particularly missing graduates of technical schools,” Masár told The Slovak Spectator, adding that each year hundreds of young people complete their education in professions that are not needed any longer in the labour market and hence start their working lives at job placement offices or in re-training courses. “We consider it necessary to carry out a reform of education as fast as possible, geared towards increasing the intertwining of education with the needs of the labour market.”

The Labour Ministry has been carrying out a project, in cooperation with its social partners in the trade unions and employer associations, called the National Scheme of Occupations, which AZZZ considers to be very useful. Along with a project planned by the Education Ministry called the National Scheme of Qualifications, AZZZ considers these two initiatives to be the key instruments for improvement in what AZZZ views as the currently unfavourable situation, believing that the initiatives will put the needs of the labour market and employers in harmony with the educational system.

Foreign jobs still lure Slovaks

Slovaks are no longer barred from finding work beyond Slovakia as the fall of the Iron Curtain and Slovakia’s entry into the European Union made it possible for Slovaks to more easily seek income abroad. Slovakia’s Centre for Labour, Social Affairs and Family (ÚPSVAR) estimated that as many as 223,000 Slovaks worked in foreign countries in 2010.

After Slovakia, along with seven other central and eastern European countries plus Malta and Cyprus, entered the European Union on May 1, 2004, several ‘old’ EU member countries were concerned that cheap labour from the new members would flood their labour markets, stripping their own citizens of job opportunities. Only Great Britain, Sweden and Ireland fully opened their labour markets to the new EU members immediately while other EU countries kept their labour markets closed to citizens from new member countries for several additional years. Two countries, Germany and Austria, used the legal possibility to keep their labour markets closed for seven years, until May 1, 2011.

Based on information in the media, Austrians and Germans were concerned about an inflow of thousands of workers from lower-wage EU countries. But currently neither Germany nor Austria expects anything like a devastating inflow of cheap labour from Slovakia, and Austria has even said that lifting of work restrictions is now seen as a way to attract qualified labour.

“We don’t expect any significant changes in the German labour market due to its opening to employees from Slovakia,” Markus Halt, spokesperson of the German-Slovak Chamber of Industry and Commerce, told The Slovak Spectator. “In Germany not only wages are higher but also the costs of living. Many Slovaks take this into account and come to the conclusion that migration to Germany does not necessarily pay off.”

Halt added that employees with a strong intention to work abroad had already taken this step and left Slovakia for higher-wage countries which had opened their labour markets several years ago, for example the United Kingdom and Ireland.

“Nevertheless, only 7 percent of Slovak employees work abroad and most of them do so in the Czech Republic,” said Halt. “For these reasons, the German labour market will not be affected very much.”
According to Halt, there is some interest in Germany in recruiting certain employees from Slovakia.
“Skilled labour from health services and crafts in particular is currently being sought,” Halt said.

Austria also does not expect negative effects from the full opening of its labour market to Slovaks, especially given that Austria had already implemented regulations in 2008 that facilitated Slovaks’ access to the Austrian job market.

“Generally speaking, the Austrian economy is in need of qualified employees, so the majority of Austrian companies welcome the end of the restrictions,” Timur Jelinek, the commercial attaché at the Austrian Embassy in Bratislava, told The Slovak Spectator. “Furthermore, we think that the approximately 1,800 Austrian companies which have invested in Slovakia will also benefit from the freedom of movement of their workers.”

Jelinek said that in principle Austrian companies are interested in recruiting Slovak workers.
“In particular, there is a high demand for qualified employees in industry and in the tourism sector,” Jelinek said. “However, the construction sector is already overloaded with qualified workers. That is to say, workers in this segment will not be in Austrian employers’ focus.”

Stanka Švecová, who works with a project called Career without Borders, expects that the opening of the German and Austrian labour markets will have a positive influence on migration by Slovaks.

“There is a high interest in Germany and Austria,” Švecová told The Slovak Spectator, adding that her organisation has worked with several excellent candidates whose good chances for appropriate jobs in those countries had been derailed by the past restrictions.

Trenkwalder, a leading provider of personnel services in central and eastern Europe, confirmed an increasing interest among Slovaks for jobs in Germany and Austria. But it added it has noticed a general growth in the interest in Slovaks working abroad due to the revival of industrial production and the economy in general in Europe.

“Germany and Austria already belong among the most searched for countries by Slovaks,” Lívia Franková, the director of the communication division at the Slovak arm of Trenkwalder told The Slovak Spectator. “The opening of the labour market should increase this interest even more. However, low language skills, which can reduce the chances of job applicants finding a good job, often remain a problem.”

Trenkwalder has also seen a change in the desired destinations of Slovak job applicants.

“While in the past Great Britain and Ireland were among the most popular destinations for Slovaks looking for jobs abroad, now these are the German-speaking countries like Austria and Germany,” said Franková. “The neighbouring Czech Republic also keeps its strong position and interest in Scandinavian countries has been increasing as well.”

Trenkwalder has not seen any significant change in the kinds of positions taken up by Slovaks abroad.

“Slovaks can be employed as manual workers or as doctors in the Czech Republic,” said Franková. “Demand for Slovaks in managerial positions is traditionally low.”

With regards to the sectors and types of jobs that Slovaks seek abroad, Švecová has not seen any particularly typical industries or jobs and does not expect any change coming.

“We [Slovaks] are neither Indians focusing on IT or African countries focusing on medicine,” said Švecová. “We are migrants working in many sectors and positions: we have people travelling abroad for manual work, middle management, administration, and so forth. We have excellent IT people, sales managers, financial experts and telecom workers as well as physicians, architects and technological engineers. I do not see any change in this – we are diversified.”

‘Natural’ migrants?

Švecová pointed out that the decision whether to leave Slovakia to work abroad only looks simple, saying that these decisions are often not taken with the vision of a better career, or study or wage opportunities, but that people rather respond to their inner voices. She added that international research on work migrants shows that people who are going to migrate simply have this urge in ‘their blood’.

“They will go at any rate, either they have excellent prospects for a job or studies in their home country or they don’t,” Švecová stated. “They simply need to test themselves for a while and to get know ‘what is over that hill’.”

Švecová believes that this zest for new experiences and getting to know the world cannot be strongly affected by any crisis or the economic climate.

“People migrate most often for personal reasons and ‘finding a better job’ is often only the official reason they communicate to their family, friends and society when they are actually seeking ‘to try their luck elsewhere’,” Švecová opined.

According to Švecová, people are constantly interested in working abroad but only the intensity level changes. The global economic and financial crisis made people more likely to stay where they were, to not risk too much and to preserve what they already had.

Švecová said that in the years before the economic crisis, Slovakia experienced a boom in migration not only because of ‘natural’ migrants but also because people were unsatisfied in their jobs and their salaries, adding that after western economies were also impacted by the crisis and many potential migrants realised that they would need to work equally hard abroad migration stabilised at normal levels.

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